State sues Lake George company for price gouging during Tropical Storm Irene

Investigation reveals prices hiked by as much as 100% to 1,000%

December 13, 2012

ALBANY - Attorney General Eric Schneiderman today announced his office filed a lawsuit in Albany County Supreme Court against American Tree Company and its principals for price gouging consumers during Tropical Storm Irene in 2011.

The attorney general's investigation revealed that American Tree took advantage of the devastation caused by Tropical Storm Irene by preying on vulnerable New Yorkers who urgently needed tree removal services, according to a press release. The lawsuit charges that American Tree used a variety of illegal and deceptive tactics to perpetrate its price gouging scheme.

New York State's Price Gouging Law strictly prohibits the unjustified price inflation of essential goods and services during an "abnormal market disruption" like those caused by a tropical storm, flood, hurricane or other disaster. Essential services include tree removal services, as well as other services necessary to repair damaged property.

"American Tree engaged in a breathtaking scheme to price gouge innocent New Yorkers out of thousands of dollars," Attorney General Eric Schneiderman said in the release. "The tactics used, and the excessive amounts charged, by this company during a time of crisis in the community shocks the conscience. Whether it is Tropical Storm Irene or Hurricane Sandy, our office has zero tolerance for price gouging and we are fully committed to enforcing the law."

According to papers the Attorney General filed in court, American Tree not only charged consumers unconscionably excessive prices, but also failed to disclose its fees prior to beginning work. In addition, the company provided inaccurate "lowball" estimates or false promises of full insurance coverage; failed to provide consumers with written contracts as required by law; inserted pricing information on documents after they were signed by consumers; charged consumers "emergency service call" fees even when consumers did not call them for services and issued invoices that contained false information.

According to the press release from the attorney general's office, the lawsuit follows an investigation by the attorney general that found the company hiked its fees exponentially for Irene-related work, charging as much as $10,000 per tree for tree removal services and also hitting consumers with undisclosed $1,500 "emergency service call" and $1,000 "after hours" fees. As a result, many consumers were hit with bills totaling tens of thousands of dollars. The release says that at least 10 consumers were charged "exorbitant amounts" ranging from approximately $11,000 to nearly $50,000, including an elderly consumer who was charged nearly $29,000 for work he never authorized. In contrast, in the month before the storm, American Tree charged no more than $4,000, and many bills were in the hundreds, not thousands, of dollars, according to the release.

The release said that lawsuit seeks an injunction prohibiting the business from engaging in illegal and deceptive practices. It also seeks restitution and damages for consumers who were victims of price gouging, disgorgement of profits for Irene-related work, penalties and costs. The lawsuit names American Tree, and its principals: Daniel Stranahan, John Stranahan and Merwin "Skip" Stranahan.

Consumers who used American Tree's services in connection with Tropical Storm Irene and think they may have been the victim of price gouging are urged to contact the attorney general's office at 1-800-771-7755 or visit www.ag.ny.gov. Consumers with price gouging complaints arising from Hurricane Sandy can obtain a price gouging complaint form at www.ag.ny.gov/hurricane-sandy-price-gouging-complaint-form.